The economics of deploying cellular networks at scale are increasingly challenging, as demands for higher data rates and better coverage go up, but user willingness to pay higher fees does not. This dichotomy is particularly wide in emerging markets, especially outside major cities, where the demand for wireless broadband is as high as anywhere else, but ARPUs may be extremely low.
Yet there are increasingly pressing reasons to extend mobile broadband to populations that may still have only 2G access, or none at all. Some of these relate to government targets for digital inclusion and social justice; some to operators’ need to reach new users, as their established consumer bases become saturated.
But a very different approach to deployment needs to be taken if outdoor networks, in rural or suburban regions of emerging economies, are to deliver both the performance users require, and the profits operators need. This will rely far more heavily than previous cellular networks on asset sharing, as well as automation, but will also support a wide diversity of equipment and services.
Small Cell Forum believes it is crucial to define and promote these new approaches, to lower barriers to deployment of HetNets that can bring much-needed connectivity to millions of citizens and businesses.
SCF has become the primary hub of activity to promote a diversity of deployment and management models, designed to transform the economics of dense network and to include a wider range of service providers in the ecosystem. This is particularly important in emerging markets, where traditional operators have often found high barriers to profitable build-out outside urban areas.
There are two secrets to the new approach to cellular build-out, and both are being driven particularly strongly from the small cell industry, and by activities within SCF.
One is diversity – a network that can be constructed from many different types of equipment, spectrum and sites, in order to support the widest range of applications and revenue streams at the most efficient cost.
Gone are the days when the only way to reach an underserved community was to invest in a macrocell, in sufficiently low frequency spectrum that it could cover many kilometers, and so reach enough people to turn a profit. A far better balance between performance and cost can be struck with a cluster of small cells, deployed so that capacity is targeted where communities are based, rather than wasted on a huge area where many places are uninhabited.
These clusters can provide services to a village, a farm or a remote industrial site, and can deliver full broadband speeds and bandwidth. Their economics are improved by the flexibility they offer to deployers. SCF members have spent years developing many form factors, which can be mounted on all kinds of street furniture, low-level buildings or even underground, depending on site availability and the most efficient locations to deliver high quality connectivity.
Creating that cluster then enables operators to layer a diversity of revenue-generating services on top of the network, rather than being constrained, by a sub-GHz macrocell, to basic voice and data offerings.
Where there is wireline broadband access available, the services can include fixed wireless access and TV, making 4G (or future 5G) the only telecoms and media platform. That allows the operator to tap into users’ entire spend on these areas, rather than just mobile, which is important in low-ARPU areas.
And if the network can reach business and industrial locations, as well as transport routes, the targeted cells will have sufficient capacity and quality of service to support business services, with their higher ARPUs, too.
The second secret to success lies in sharing. While the small cell form factors and the applications need to be diverse to suit any of a multitude of deployment and commercial scenarios, the infrastructure and specifications underneath them must be as unified as possible. SCF has stepped up its work to drive technical specifications, commercial frameworks and regulatory agreement, to facilitate neutral host and multi-operator models, which are particularly important in emerging markets where ARPU potential may be constrained.
Sharing infrastructure – sites, backhaul, power and other assets – can greatly improve the cost base and ROI for any small cell networks, but this is particularly true in emerging markets where margins may be very tight. Some regulators are starting to pressurize, or even mandate operators to build shared rural networks to reach underserved citizens. However, there are many voluntary and commercial arrangements which can dramatically improve the business case for operators and accelerate the launch of broadband services for citizens and businesses.
Sharing of underlying infrastructure is the starting point. Operators are becoming accustomed to sharing cell towers and accompanying power and backhaul resources, and the habit of building on sites that are run by a neutral host, or shared by several MNOs, is spreading to small cells.
In this segment, sharing can have an even more dramatic impact on the business case than in macrocells because of the sheer number of different sites that must be built out and maintained to support an industrial zone or even a rural community. Indeed, shared infrastructure is often the only way to make an outdoor small cell economical at any scale, reducing total cost of ownership by as much as five times, according to a survey of 40 cellular network deployers in Africa and emerging Asia.
This is not just about infrastructure sharing. The more the small cell industry cooperates on technical specs and management models, the lower the cost and time to deploy a network that can start to support services and revenue streams from day one. Under SCF’s auspices, technologies to enable open, multivendor networks, from chip to management layers, have been evolved over a decade. These are very important to increase competition and innovation in the industry and reduce TCO.